FTC Examines Consumer Injuries And Benefits In The Data-Driven Economy

The Federal Trade Commission (FTC) hosted a workshop on "Consumer Injuries and Benefits in the Data-Driven Economy" on February 26, featuring economists and other experts who examined how the FTC can better evaluate consumer injuries and benefits resulting from the collection, use, or disclosure of consumer data. The five panels focused on: quantifying information injuries and benefits resulting from consumer data collection and use; the impacts of data breaches on consumers; the costs and benefits of behavior and contextual advertising; and measuring consumer preferences, beliefs, and decisions.

Below we summarize the workshop and provide key takeaways.

FTC Leadership Remarks

The workshop opened with remarks from Chairman Andrew Ferguson, who explained that the purpose of the session was to consider questions such as how data should be valued, and how to determine what constitutes a harm when consumers do not fully understand how their data is collected. He opined that Section 5 of the FTC Act is not an obstacle to innovation and instead should promote technological innovation that supports consumer choice and benefits. In closing remarks, Consumer Protection Bureau Director Chris Mufarrige also focused on consumer choice, saying the FTC's privacy work should empower that choice within a notice and consent framework. Director Mufarrige also described prior efforts to impose additional substantive limitations on data collection and use as misguided.

Panels 1 and 2: Quantifying Injuries & Benefits to Consumers

The first panel discussed studies and surveys that sought to quantify consumer injury from data transfers, whether targeted ads provided a net benefit or harm to consumers, and the impact of personalized and dynamic pricing on consumers. For example, one panelist discussed a survey of social media users in which one group experienced ads, and another had no ads, to measure their impact on users. The survey found that while users who did not experience ads spent more time on the platform, even users who experienced ads still frequently used the platform and found it valuable. Participants also suggested that additional data is necessary to help quantify possible harms arising from deepfakes and data brokers' collection of information.

The second panel focused on the advantages of leveraging information and using data-driven methods in advertising. The panel generally agreed that access to user data enhances advertising effectiveness, boosts publisher revenue, fosters competition, increases total transactions, and can lead to more affordable, better-tailored products for consumers.

Additionally, several speakers also emphasized that harm mitigation policies may simultaneously reduce efficiencies, competition, or consumer benefits, and that regulators should consider the potential opportunity costs and social harms associated with overly restrictive privacy laws. For instance, one panelist argued that sharing certain telematics data from automobiles could promote safer driving behaviors and decrease the incidence of fatal accidents. Overall, the panel emphasized the importance of identifying both the harms and benefits of data practices, recognizing secondary benefits, and accounting for downstream future uses of information when evaluating privacy regulations.

Panel 3: Impact of Data Breaches

The third panel examined the consumer impacts of data breaches, risk mitigation incentives, and cybersecurity tools. Panelists described the wide range of harms consumers may suffer when their data is compromised, including identity theft, financial loss, emotional distress, and possible physical harm. One panelist also noted the growing prevalence of ransomware attacks, which can impose safety risks in sectors such as health care, where attacks have been associated with worse patient outcomes.

Turning to mitigation strategies, panelists emphasized that stronger enterprise-level cybersecurity is associated with better outcomes, particularly when companies adopt a layered approach that includes access controls, network protections, vulnerability patching, security training, and technical safeguards such as multifactor authentication and endpoint detection. The NIST Cybersecurity Framework was highlighted as a helpful mechanism to review a company's cybersecurity strategies, and panelists recommended that companies focus on updating their cybersecurity policies and practices accordingly.

Panel 4: Behavioral & Contextual Advertising

The fourth panel examined the costs and benefits associated with behavioral and contextual advertising. Panelists analyzed the complex economic, consumer, and regulatory considerations implicated in these advertising models and emphasized that substantially larger datasets are necessary to accurately assess both their advantages and potential harms. Although existing research reflects certain consumer benefits, panelists cautioned that vulnerable populations may face heightened risks from targeted advertising practices, and that limited access to comprehensive datasets continues to impede fulsome harm assessments.

The panel also explored cost–benefit considerations for private-sector stakeholders. Panelists noted that while firms may adjust their revenue strategies when data-use restrictions are implemented, experiences under regulatory regimes such as the General Data Protection Regulation (GDPR) and Apple's App Tracking Transparency framework suggest that overall content production and user engagement levels have remained relatively stable.

Finally, the panel identified several priorities for future research:

• Broad, long-term, system-level studies to better evaluate how the costs and benefits of behavioral advertising are distributed across different stakeholder groups, including consumers, advertisers, and platforms;
• Understanding who benefits and who is harmed, particularly as impacts vary widely across consumer groups; and
• The long-term effects of privacy interventions – such as the GDPR – which may cause short-term disruptions but often stabilize as industries adapt.

Panel 5: Measuring Consumer Preferences, Beliefs, and Decisions

The fifth panel examined tools to measure consumers' privacy preferences, beliefs, and decisions. Panelists emphasized that such preferences are highly contextual and dynamic, making them hard to evaluate. They explained that user preferences can be influenced by a wide range of factors. According to one panelist, users are more willing to share their data with websites they trust – such as news, education, or e-commerce platforms – as opposed to websites with political or adult content. Panelists also discussed how choice architecture – the existence and design of nudges or "dark patterns" – complicates measuring user preferences. User preferences and beliefs can further be influenced by societal factors, such as the COVID-19 pandemic.

To effectively measure consumer preferences, one panelist emphasized the need for scalable and cost-effective measuring tools, including AI tools. Other panelists stressed the importance of separating out user preferences based on context. Panelists also explained how time spent on an application or the willingness to deactivate a product are not perfect proxies for measuring economic benefit or harm. Notably, one panelist offered that the FTC should measure harm not by stated preference, but by how companies value the collected data.

Conclusion

One consistent theme throughout the day was the need for more comprehensive, high-quality data to support reliable assessments of advertising practices, breach-related injuries, and consumer preferences. Panelists also repeatedly stressed that policymakers should adopt approaches grounded in empirical evidence, nuanced understanding of consumer behavior, marketplace needs, and recognition of both short- and long-term effects of regulatory intervention.